Newbie from Southern California

West Covina, CA · Member since 2018 · 7 posts · 7 votes

Hello Biggerpockets! Long time lurker, first time poster here from Southern California. Like many others, I've been binge-watching the podcasts and reading many of the blog posts here on this site.

I am pretty much a complete newbie when it comes to investing in real estate. However, I have had some indirect exposure as I've been working in the commercial mortgage industry since graduating from college in 2011 (mostly on the underwriting and portfolio management side).

I've also dipped my toes in a little further recently by helping my parents buy a new house and renting out their old condo with the help of a management company.

Currently am looking for buy and hold opportunities in markets such as Kansas City MO, Greensboro NC, Columbus OH as properties in my local markets are just a tad bit out of my price range.

Cheers!

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Logan AllecBusiness Member

Accountant · Los Angeles, CA · Member since 2014 · 1k+ posts · 980 votes

Welcome, @Jeff Chen

Some people do well out-of-state, but have you considered an owner-occupied small multifamily for your first deal?

You only need to put 3.5% down, so cashwise it won't get in the way of other real estate goals you may have.

My first deal was a 4-unit up I bought with FHA3.5% in Santa Clarita.

I lived for free (as opposed to paying rent) + enjoyed cash flow + built equity. It was a great investment (and still is).

Good luck!

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Logan AllecBusiness Member
Accountant · Los Angeles, CA · Member since 2014 · 1k+ posts · 980 votes
8y
Welcome, @Jeff Chen
Some people do well out-of-state, but have you considered an owner-occupied small multifamily for your first deal?
You only need to put 3.5% down, so cashwise it won't get in the way of other real estate goals you may have.
My first deal was a 4-unit up I bought with FHA3.5% in Santa Clarita.
I lived for free (as opposed to paying rent) + enjoyed cash flow + built equity. It was a great investment (and still is).
Good luck!
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Jeff Chen
OP
West Covina, CA · Member since 2018 · 7 posts · 7 votes
8y
Hi Logan,
Yes, investing in a small multifamily asset and living in one unit is definitely on my radar as well. Being able to live for free while enjoying cash flow and equity build-up would be an ideal situation. Just need to find a property that hopefully would be within a 1.5-hour drive from my work and not in an area where I'd fear for my life.
Thanks for the warm welcome!
2 Reply
Trisha Alton
Wholesaler · Lansing, KS · Member since 2015 · 92 posts · 13 votes
8y
Let me know if you need any assistance in the KC market!
0 Reply
Michael Swan
Rental Property Investor · San Diego, CA · Member since 2014 · 1k+ posts · 2k+ votes
8y
Welcome!! This is Swanny in San Diego. If you have any questions Fire away. I have 122 front doors comprised of 8 apartment complexes and 4 single family in NE Ohio. I just started one little single family at a time and then 1031 exchanged them for apartment complexes out of state. Cap rates and cash flow are now way too low in so cal now. Swanny
0 Reply
Tom Ott
Equity Raiser and Turnkey Provider · Cleveland, OH · Member since 2016 · 4k+ posts · 1k+ votes
8y
Originally posted by @Jeff Chen:

Hello Biggerpockets! Long time lurker, first time poster here from Southern California. Like many others, I've been binge-watching the podcasts and reading many of the blog posts here on this site.
I am pretty much a complete newbie when it comes to investing in real estate. However, I have had some indirect exposure as I've been working in the commercial mortgage industry since graduating from college in 2011 (mostly on the underwriting and portfolio management side).
I've also dipped my toes in a little further recently by helping my parents buy a new house and renting out their old condo with the help of a management company.
Currently am looking for buy and hold opportunities in markets such as Kansas City MO, Greensboro NC, Columbus OH as properties in my local markets are just a tad bit out of my price range.
Cheers!
Hello and welcome! BP is a great place to get started! Best of luck to you!
0 Reply
Robert EllisBusiness Member
Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
8y
Originally posted by @Jeff Chen:

Hello Biggerpockets! Long time lurker, first time poster here from Southern California. Like many others, I've been binge-watching the podcasts and reading many of the blog posts here on this site.
I am pretty much a complete newbie when it comes to investing in real estate. However, I have had some indirect exposure as I've been working in the commercial mortgage industry since graduating from college in 2011 (mostly on the underwriting and portfolio management side).
I've also dipped my toes in a little further recently by helping my parents buy a new house and renting out their old condo with the help of a management company.
Currently am looking for buy and hold opportunities in markets such as Kansas City MO, Greensboro NC, Columbus OH as properties in my local markets are just a tad bit out of my price range.
Cheers!
Hi Jeff,
Investing from out of state is challenging but if set up correctly, it can be a great way to reach areas that can give you a better return. First thing to consider is the team: lender, agent, property manager, attorney etc... Build a local team that is familiar not only with the area but also with the type of property you are purchasing - location, unit count/mix, rents etc...These folks will be your boots on the ground. If you can come to the city to visit that helps but often, as a majority of properties are "curb offers only", buyers will come out for inspections after the offer is made and then go home and complete the rest of deal form there. It's critical as an out of state investor to build a team that you trust to advise you. Good luck with everything!
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Jonathan Castillo
Austin, TX · Member since 2017 · 17 posts · 4 votes
8y
Hey Jeff Chen welcome to BP! I’m also a newbie in the Southern California market. Let me know if you ever wanna meet up and grab a drink or a coffee to discuss anything real estate related. Best of luck
1 Reply
Samuel Collier
Greensboro, NC · Member since 2016 · 36 posts · 22 votes
8y
Greensboro is the place to be!
0 Reply
Christal Warren
Multi-Family Apartment Investor · Brandon, MS · Member since 2016 · 42 posts · 14 votes
8y
@Jeff Chen
Welcome. I totally agree with Robert about building a team. One thing that really helped me is finding a partner to work with. Someone that holds you accountable and you can bounce ideas off of.
Good luck.
0 Reply
Matt Motil
Rental Property Investor · Cleveland, OH · Member since 2015 · 1k+ posts · 880 votes
8y
Welcome to BP @Jeff Chen! Best of luck to you in your journey!
0 Reply
Larry Fried
Investor/RE Broker · Eugene, OR · Member since 2014 · 3k+ posts · 968 votes
8y
Hi @Jeff Chen and welcome out of the BP shadows and into the posting light! What are you looking to do, buy something that needs work, or something turnkey? How passive or active do you want to be?
0 Reply
James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
8y
Originally posted by @Jeff Chen:

Hello Biggerpockets! Long time lurker, first time poster here from Southern California. Like many others, I've been binge-watching the podcasts and reading many of the blog posts here on this site.
I am pretty much a complete newbie when it comes to investing in real estate. However, I have had some indirect exposure as I've been working in the commercial mortgage industry since graduating from college in 2011 (mostly on the underwriting and portfolio management side).
I've also dipped my toes in a little further recently by helping my parents buy a new house and renting out their old condo with the help of a management company.
Currently am looking for buy and hold opportunities in markets such as Kansas City MO, Greensboro NC, Columbus OH as properties in my local markets are just a tad bit out of my price range.
Cheers!
Welcome to the site Jeff.
0 Reply
Jeffrey Leung
Alhambra, CA · Member since 2016 · 9 posts · 3 votes
8y
Hey Jeff, I am also in the East LA area. I have recently done several in KCMO. So far cash flowing pretty well. I can give you my experience if your interested. First time doing out of state for me. There is a meetup for out of state investors of you’re also interested. Good luck!
0 Reply
Ali Boone
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
8y
Welcome Jeff!
0 Reply
Dmitriy Fomichenko
Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
8y
@Jeff Chen
Welcome to the BP family! Glad you joined the best real estate investing website! Here are some recommendations for you:
Find and connect with other BP members that are in your area: http://www.biggerpockets.com/meet
Set up keyword alerts to be notified of the topics that interest you: http://www.biggerpockets.com/alerts
Read Beginner’s Guide: http://www.biggerpockets.com/real-estate-investing
Check out BP Podcasts: http://www.biggerpockets.com/renewsblog/category/podcast/
If you wish to tag someone in the conversation on the forum, type @ followed by their name and then select the name of that person which should appear below the comments box. He or she will be notified of being tagged so that the conversation will continue.
Wishing you the best!
1 Reply
George Blower
Retirement Accounts Attorney · Southfield, MI · Member since 2017 · 3k+ posts · 1k+ votes
8y
@Jeff Chen
Welcome to Bigger Pockets.
0 Reply
Brock VandenBerg
Real Estate Investor · San Diego, CA · Member since 2014 · 52 posts · 39 votes
8y
Hi Jeff. Thank you for posting! You are doing the right thing by educating yourself about investing in real estate before jumping in. There are plenty of ways to get started and I have read some really good ideas! Here is my suggestion based upon personal experience.
If you haven't already, I would highly consider purchasing a property for yourself and renting a room or two for cash flow. I say this for several reasons. First, I am in the belief that you are better off owning property in Southern California "over the long term" vs. a rental property in the cities you mentioned (yes, I know cap rates are better in the middle states but we are talking long term). Historically home prices and rents have increased much more rapidly in So Cal vs the markets you mentioned. Second, owner occupied financing is much easier (and cheaper) to obtain then income property loans. Third, managing out of state property isn't easy and can go badly very quickly (and I can vouch for that).
I purchased my first property 18 years ago in Fremont, CA (outside of SF / Oakland). It was a 2 bed / 2 bath condo that I could barely afford, but which I rented a room to a friend to help with the payment. After a couple of years, I moved to San Diego (kept the property) and used an equity line of credit to purchase another property in which I lived for another 2 years. At about the time of the housing bust (won't lie about 2 months before the crash), I purchased another home to raise a family. I will admit that I was cash flow negative on the 2 rentals (in which the rents were sufficient to cover all direct expenses (interest, taxes, etc.) but came out of pocket to cover 50% of the principal payment on the loan, which I chalked up to an alternative way to increase savings. I have since purchased another property and rent out the third property. The take away is that rents have increased by 2% - 4% per year, property values are up 3%+ per year depending on the property and when they were purchased, and the tenants average 5 years. As I get older, my investment objectives have become more conservative (no longer using LOC to purchase property) with principal paydown being my primary goal. When good investment opportunities come up (mostly lending opportunities), I can always use existing cash or LOC to jump.
As I mentioned, this strategy isn't for everyone. This strategy has worked for me because I didn't necessarily need the cash flow and my objective was more equity growth vs. cash flow.
Brock VandenBerg
0 Reply
Justin R.
Developer · San Diego, CA · Member since 2015 · 1k+ posts · 1k+ votes
8y
For simplicity of communication, I've begun to refer to myself as a "net worth investor" rather than a "cash flow investor". Ignoring the nuances (that I know we both well understand), does that label terminology resonate with you?
0 Reply
Jeff Chen
OP
West Covina, CA · Member since 2018 · 7 posts · 7 votes
8y
@Dmitriy Fomichenko Thanks for all the tips! I've been abusing the @ function in this post LOL!
@Brock VandenBerg Hi Brock. Thanks for sharing your experience! I'm definitely still keeping the owner-occupied path open as an option. Easier to keep tabs on since I'm there and as you mentioned easier to get financing.
0 Reply
Jeff Chen
OP
West Covina, CA · Member since 2018 · 7 posts · 7 votes
8y
@Jonathan Castillo yeah absolutely, let's do it!
@Jeffrey Leung Hey Jeffrey, always cool to see someone from SGV. I'd love to hear more about your experience with KCMO. Which meetup do you attend?
0 Reply
Jeff Chen
OP
West Covina, CA · Member since 2018 · 7 posts · 7 votes
8y
@Larry Fried Hi Larry, I'm looking to buy something that might require some surface level work (ie. new paint job, new countertops, etc...) but nothing too crazy like foundation or new roofing. Hoping to get a reputable property management company to manage the property while providing me with routine updates.
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Andrew SyriosPro Member
Moderator
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
8y
Welcome to BiggerPockets Jeff!
Podcast Guest on Show #121
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Moris Reyes
Investor · Long Beach, CA · Member since 2017 · 29 posts · 9 votes
8y
Welcome to BP @Jeff Chen
have you tried conventional 1% down? this is how it works, you put 1% your lender contributes 2% for the down payment giving you 3% equity in your home then you finance the rest with a conventional loan with option to avoid monthly MI and still get a great rate.
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Frank Lin
Los Angeles, CA · Member since 2018 · 14 posts · 3 votes
8y
@Jeff Chen Hi Jeff and welcome to BP! I am in a similar situation and would like to hear how your experience is going so far in investing in out of state multi family units.
Did you ever find out from @JeffreyLeung where the meetup was?
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Aziz Raji
Real Estate Agent · Chicago, IL · Member since 2017 · 715 posts · 138 votes
8y
Welcome to BiggerPockets! It is great to have you and feel free to jump in the community there are great people in the forum.
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